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The former Countrywide Financial Corp. gave preferential loans to more than three dozen employees of Fannie Mae while the two giant housing enterprises were locked in an expanding, multi-billion dollar business relationship in subprime mortgages, documents show.

Discounted mortgages written by Countrywide, once the nation’s largest subprime lender, were granted to a far wider group of Fannie employees than the four top executives executives whose preferential loans were previously disclosed, according to Countrywide documents provided to Congress under a subpoena.

Countrywide’s VIP section, established to handle preferential mortgages for favored customers, serviced a variety of Fannie employees who handled Fannie’s business of buying mortgages and selling mortgage-backed bonds. Recipients included an account manager, a lobbyist, underwriters, lawyers, a home loan manager, a sales executive and a credit risk manager.

The documents reveal that when Countrywide was depending on government-sponsored firms to finance billions of dollars worth of subprime loans that touched off the housing meltdown, it was giving employees at the largest of those companies — Fannie Mae — sweetheart deals on their own home loans.

Countrywide was acquired by Bank of America in mid-2008. The documents were turned over to the House Oversight and Government Reform Committee by Bank of America. The government seized control of Fannie Mae and its smaller government-sponsored competitor, Freddie Mac, in September 2008. So far, the takeover has cost taxpayers $145 billion and is likely to be the most expensive of all the financial bailouts.

Rep. Darrell Issa of California , the House committee’s senior Republican, said Countrywide’s preferential VIP mortgages for Fannie employees spiked in 1998, when Countrywide was negotiating volume discounts on the subprime mortgages it was selling, and again from 2001 to 2003, at the edge of a housing and mortgage boom.

In a letter to the Federal Housing Finance Agency — the government agency that regulates Fannie Mae and a smaller competitor, Freddie Mac — Issa said Countrywide’s 153 loans to 37 Fannie employees were part of a attempt to vastly expand business with Fannie to the detriment of Freddie. Though government-chartered institutions, both Fannie and Freddie were owned by private stockholders.

“In 1999, Countrywide reached an exclusive agreement to sell Fannie Mae billions of dollars in mortgages at a discounted rate,” Issa said in the letter.

Records compiled by a trade publication, Inside Mortgage Finance, show Fannie rapidly expanding its purchases of Countrywide mortgages and a decline in sales of them to Freddie.

In 1998, Countrywide sold $25.6 billion in loans to Fannie and $17.7 billion to Freddie. By 1999, the figures were $30.8 billion to $11.2 billion in Fannie’s favor. By 2004, the spread was much wider: $67.7 billion in Countrywide mortgages sold to Fannie Mae compared with $2.9 billion in mortgages sold to Freddie Mac.

Also among the subpoenaed documents was a May 2001 “confidential and proprietary” e-mail from a Countrywide official to other company officials discussing the sensitivity of the discounted VIP mortgage loan to Daniel Mudd, then Fannie’s vice chairman and chief operating officer. He later became chief executive.

“Make sure the branch and RVP understand the sensitivity of this deal,” the e-mail said. “We already are taking a loss, it would be horrible to add a service complaint on top and lose any benefit we generate.” The meaning of RVP is unclear.

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So far nearly 6,400 borrowers have dropped out after the loan modification was made permanent. Most of those borrowers likely defaulted on their modified loans, but a handful either refinanced or sold their homes.

Credit ratings agency Fitch Ratings projects that about two-thirds of borrowers with permanent modifications under the Obama plan will default again within a year after getting their loans modified.

Obama administration officials contend that borrowers are still getting help — even if they fail to qualify. The administration published statistics showing that nearly half of borrowers who fell out of the program as of April received an alternative loan modification from their lender. About 7 percent fell into foreclosure.

Another option is a short sale — one in which banks agree to let borrowers sell their homes for less than they owe on their mortgage.

A short sale results in a less severe hit to a borrower’s credit score, and is better for communities because homes are less likely to be vandalized or fall into disrepair. To encourage more of those sales, the Obama administration is giving $3,000 for moving expenses to homeowners who complete such a sale or agree to turn over the deed of the property to the lender.

Administration officials said their work on several fronts has helped stabilize the housing market. Besides the foreclosure-prevention plan, they cited government efforts to provide money for home loans, push down mortgage rates and provide a federal tax credit for buyers.

“There’s no question that today’s housing market is in significantly better shape than anyone predicted 18 months ago,” said Shaun Donovan, President Barack Obama’s housing secretary.

The mortgage modification plan was announced with great fanfare a month after Obama took office.

It is designed to lower borrowers’ monthly payments — reducing their mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. Borrowers who complete the program are saving a median of $514 a month. Mortgage companies get taxpayer incentives to reduce borrowers’ monthly payments.

Consumer advocates had high hopes for Obama’s program when it began. But they have since grown disenchanted.

“The foreclosure-prevention program has had minimal impact,” said John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer group. “It’s sad that they didn’t put the same amount of resources into helping families avoid foreclosure as they did helping banks.”

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